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Wednesday, Apr 28, 2004

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Prospects bleak for grain exports this fiscal

Harish Damodaran

New Delhi , April 27

AFTER shipping out around 33 million tonnes (mt) of foodgrains since December 2000, large-scale exports seem a remote possibility in the current fiscal.

An indication of this is the relatively low profile of the private trade in procurement of wheat during the current rabi marketing season (April-June).

Of the total wheat arrivals of 145.47 lakh tonnes (lt) in major mandis of the country as on Tuesday, private purchases have amounted to a mere 7.32 lt.

The bulk amount of 138.15 lt has been procured by the Food Corporation of India (FCI) and State agencies.

In Punjab, official agencies have mopped up 85.49 lt out of the progressive arrivals of 87.61 lt so far, with the corresponding figures being 47.03 lt (47.68 lt) for Haryana, 2.40 lt (3.87 lt) for U.P., 1.80 lt (3.07 lt) for Rajasthan and 1.22 lt (2.35 lt) for M.P.

According to officials in the Ministry for Consumer Affairs, Food and Public Distribution, private purchases undertaken in Punjab and Haryana have largely been restricted to flour millers for meeting their own requirements.

This is despite the two State Governments exempting the private trade from forking out any levies, barring the 2.5 per cent fee payable to arthiyas (commission agents).

The Government agencies, on the other hand, have to shell out a four per cent purchase tax, a two per cent market fee, a two per cent rural development and one per cent infrastructure cess, besides the 2.5 per cent arthiya commission.

"Procurement for export purposes has mainly been from centres in M.P., Rajasthan and Gujarat, which are close to the ports," the officials said.

There is no precise estimate of what quantity has been contracted by exporters so far, though Mr D.P. Singh, Chairman of the All-India Grain Exporters' Association, puts the figure at 2-2.5 lt.

In other words, the recent policy of encouraging exports on private trade account has simply not taken off, with the exporters blaming the Government for not declaring the extent of reimbursement they are entitled to claim towards various WTO-compatible freight and marketing expenses.

The exporters are, therefore, now awaiting a Government decision to renew fresh allocations for exports from the Central pool. These have been suspended since August 13, 2003 keeping in view the depletion in public stocks.

The Government is set to review the issue of resuming allocations sometime in July, which is again a policy decision to be taken by the new administration at the Centre.

But here too, the news is not particularly bright. At the start of the current rabi marketing season, total stocks were estimated at 21 mt, comprising 13 mt of rice, seven mt and 0.6 mt of coarse grains.

Ministry officials said wheat procurement this season would touch 17-17.5 mt, at the most.

"We had originally estimated 10 mt from Punjab and 5.5 mt from Haryana, whereas they are likely to end up at about nine mt and five mt. So, we would not be able to procure the 20 mt that was originally estimated."

As a result, aggregate foodgrain stocks as on July 1 are expected to be 34-35 mt, which will still be higher than the minimum buffer norm of 24.3 mt stipulated for that date.

"The stocks position would be more than comfortable as far as meeting domestic requirements goes. But whether that leaves an adequate surplus for exports will depend primarily on the progress of the monsoon. We would definitely not like a situation to develop where the country will be exporting now and importing six months down the line," the officials added.

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